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Beginning inventory 0
Units produced 10,000
Units sold 8,000
Selling price per unit $75
Selling and administrative
expenses:
Variable per unit $6
Fixed per month $200,000
Manufacturing costs:
Direct materials cost per
$20
unit
Direct labor cost per unit $8
Variable manufacturing
$2
overhead cost per unit
Fixed manufacturing
$100,000
overhead cost per month
Required:
1.Assume that the company uses absorption costing.
Explanation:
1-a.
The unit product cost under absorption costing is:
Direct materials $ 20
Direct labor 8
Variable manufacturing
2
overhead
Fixed manufacturing overhead
10
(100,000 10,000 units)
b.
2-a.
The unit product cost under variable costing is:
Direct materials $ 20
Direct labor 8
Variable
manufacturing 2
overhead
Variable costing
$ 30
unit product cost